Agenda and draft minutes

Venue: Bromley Civic Centre

Contact: Keith Pringle  020 8313 4508

Items
No. Item

26.

APOLOGIES FOR ABSENCE AND NOTIFICATION OF SUBSTITUTE MEMBERS

Minutes:

Apologies were received from Cllr David Jefferys and Cllr Kira Gabbert attended as alternate.

 

27.

DECLARATIONS OF INTEREST

Minutes:

There were no declarations.

 

28.

MINUTES OF THE PENSIONS INVESTMENT SUB-COMMITTEE MEETING HELD ON 24TH JULY 2019 pdf icon PDF 120 KB

Additional documents:

Minutes:

The Part 1 minutes were agreed.

 

29.

QUESTIONS BY MEMBERS OF THE PUBLIC ATTENDING THE MEETING

In accordance with the Council’s Constitution, questions that are not specific to reports on the agenda must have been received in writing 10 working days before the date of the meeting. 

 

Questions specifically relating to reports on the agenda should be received within two working days of the normal publication date of the agenda. Please ensure that questions specifically on reports on the agenda are received by the Democratic Services Team by 5pm on Tuesday 20th August 2019.

Minutes:

Three questions were received for written reply. Details of the questions and replies are at Appendix A.

 

30.

UPDATES FROM THE CHAIRMAN AND/OR DIRECTOR OF FINANCE

Minutes:

There were no updates from the Chairman under Part 1 proceedings.

 

Updating matters provided by the Director of Finance comprise those summarised below.  

 

Annual Report and Accounts of the L B Bromley Pension Fund 2018/19

 

Concerning the Annual Report and Accounts of the L B Bromley Pension Fund 2018/19, considered at the Sub-Committee’s previous meeting, the report was subject to auditing by the Fund’s external auditor.

 

It was intended to present the final report to the meeting for approval so it can be published to the Council’s website by 1st December 2019. However, the external auditors had yet to complete their audit of the pension fund accounts. As the Sub-Committee’s next meeting is after the report’s required 1st December publication date, it was intended to publish the report and accounts following the audit’s sign-off.

 

In the circumstances Members resolved to delegate authority to the Director of Finance for approving the report, in consultation with the Chairman and Vice-Chairman, following conclusion of the audit.

(Democratic Services Note: the audited report would then be presented to the Sub-Committee’s 3rd December meeting for information).

 

Good Governance Survey

 

No further update had been received on governance proposals outlined in the Government’s Good Governance survey (highlighted to the Sub-Committee at its meeting on 15th May 2019) but the Director would keep Members updated should any significant developments arise.

 

Draft Statutory Guidance

 

Concerning pooling arrangements, the draft guidance uses terms such as “best endeavours” and “common good”; however, reference to transfers for the common good of pooling is not now expected to be in the revised  Government guidance. Additionally, the April 2020 date for fully transferring assets to pooling bodies is expected to be delayed by a sufficient margin as this date is unrealistic to many local authority pension funds. 

 

Local Authority Pension Fund Awards

 

For the third consecutive year, L B Bromley received recognition for the long term performance of its Pension Fund and is in the final shortlist for the LAPF awards. Bromley’s performance has recently been highlighted in a professional press article. 

 

LGPS community document

 

The Local Government Association Pensions Team recently published a new document called ‘the LGPS Community’ which had been produced in response to a request from the Local Government Pension Committee (LGPC). The document’s purpose is to explain the relationship between the different bodies making up the Local Government Pension Scheme (LGPS) community. Members were reminded that a link to the document had recently been emailed (the link was also emailed to LPB members).

 

31.

PENSION FUND PERFORMANCE Q1 2018/19 pdf icon PDF 128 KB

Additional documents:

Minutes:

Report FSD19084

 

Details were provided of the Fund’s investment performance for the first quarter 2019/20. Additional detail was provided in an appended report from the Fund’s external advisers, MJ Hudson Allenbridge. In advance of the meeting Members also received Fund Manager Reports on first quarter performance along with a quarterly Sustainable Investment Report from Schroders.  

 

The market value of the Fund ended the June quarter at £1,094m (£1,039.2m at 31st March) and had further increased to £1,132m at 31st July 2019.The quarter total fund return of +5.60% against a +4.32% benchmark compared to a +3.8% average across the 64 LGPS funds in PIRC’s universe. Detail on performance by individual fund managers was appended to Report FSD19084.

 

The Fund’s medium and long-term returns remained very strong overall -  the Fund ranking eleventh in the PIRC LGPS universe for the year to 31st March 2019, first over three years, second over five years and first over ten, 20 and 30 years. In addition to winning the LGPS Investment Performance of the Year in 2017, the LGPS Fund of the Year (assets under £2.5bn) in 2018, L B Bromley also recently won the Pensions, Treasury and Asset Management Award at CIPFA’s Public Finance Awards 2019, recognising the consistent high performance of the Fund.

 

General financial Information was also appended to Report FSD19084, including final outturn details for the 2018/19 Pension Fund Revenue Account and the first quarter position for 2019/20. Details on Fund membership numbers were further provided along with summarised information on early retirements.

 

Following the Sub-Committee’s previous consideration of Fidelity’s Multi- Asset Credit Fund product, the appended report from MJ Hudson Allenbridge provided further comment on the fund.  

 

Concerning admission agreements for outsourced services, the cessation debt and deficit repayment plan for Mytime Active was being finalised for agreement by the Director of Finance, in consultation with the Chairman and the Chairman of General Purposes & Licensing Committee under delegated authority from the General Purposes & Licensing Committee. For GS Plus, the final transfer payment was being considered by the Actuaries and four admission agreements were being arranged in relation to Academies having outsourced services. Discussions were also ongoing for a possible admission agreement following transfer of the Council’s adoption service to Coram.

 

The report also outlined future Fund Manager attendance as:

 

3rd December 2019 – Baillie Gifford (global equities and fixed income)

3rd January 2020 – MFS (global equities)

13th February 2020 – Fidelity (fixed income, multi-asset income and property).

 

Mr Arthur indicated that the quarter had been positive for the Fund. Although there are signs of a slowing global economy this had been abated by the promise of further central bank easing. The Fund was performing very well long term. Six of the Fund’s seven portfolios outperformed their benchmark in the quarter with only Fidelity’s UK property marginally underperforming (the portfolio was funded just over a year ago and given the heavy cost of purchasing property assets, it is too early for performance figures to  ...  view the full minutes text for item 31.

32.

PENSION FUND - INVESTMENT REPORT

Representatives of Schroders will be attending the meeting for this item.

Minutes:

Schroders were represented for the item by their Fund Manager and Client Director.

 

Before reporting on performance of their Global Diversified Income mandate (dollar based), Schroders indicated that an equivalent UK based sterling fund was now available. Members had previously agreed Schroders offer to switch the current fund to the sterling fund. Transfer costs would be fully met, and possibly exceeded, by a reduction in Schroders management fees. 

 

Printed copies of the Schroders presentation were circulated to Sub-Committee Members in advance of the meeting. Schroders investment objective for Global Diversified Income comprises:

 

·  an income objective with 3-5% p.a. distribution from coupons and dividends; and

 

·  an objective consistent with a 30% equity/ 70% bond portfolio over a market cycle.

 

Schroders intend to deliver the investment objective by:

 

·  diversification across a broad range of income generating assets;

·  direct investment in underlying securities and active management;

·  dynamic asset allocation across economic regimes and market cycles; and

·  downside risk management to reduce drawdown during periods of market correction.

 

A graph included returns from the product since inception in April 2012 along with the fund return (GBP hedged) for Year to Date, I Year, 3 Years, 5 years, and since inception. Details of the fund return (GBP hedged) for each year from 2014 to 2018 were also provided. Although the MAI product had performed poorly in 2018 (-5.6%) the position was now recovered and for the year to date a return (GBP hedged) of 7.7% was achieved. A further slide showed year to date and 12 month contributions to the returns by asset class i.e. Equities, Fixed Income, Hybrids, Alternatives, and Cash and Currency with another slide highlighting yields for certain classes (Equity, Investment Grade, High Yield, Government Bonds, EMD, Alternatives and Hybrids) at points since inception.

 

Another slide highlighted percentage changes of allocation within asset classes between 31st December 2018 and 31st July 2019. Schroders now had a reduced exposure to Equities as of 31st July 2019 at 26.5% compared to 28.0% at 31st December 2018. Schroders were not now taking so much risk in equities other than for the U.S. Fixed Income had also reduced from 51.3% at 31st December 2018 to 49.0% at 31st July 2019 although Corporate Bonds continued to be favoured by Schroders, particularly those in the U.S. Schroders own a lot of 30-year bonds from which they receive significant return. Holdings in Hybrids increased to 13.3% at 31st July 2019 from 3.0% at 31st December 2018 whereas exposure to Alternatives reduced by -7.6% in the same period. The next slide showed the current allocation by asset class as at 31st July 2019.

 

In transitioning to Global Diversified Income, a further slide showed the current position and weightings of Equity, Fixed Income, Hybrids, Alternatives and Cash for Global Multi-Asset Income and Global Diversified Income. The next slide highlighted Schroders current allocation for Global Diversified Income by Equities, Fixed Income, Hybrids, Alternatives and Cash. With further reference to Schroders transition to Global Diversified Income,  ...  view the full minutes text for item 32.

33.

LOCAL GOVERNMENT ACT 1972 AS AMENDED BY THE LOCAL GOVERNMENT (ACCESS TO INFORMATION) (VARIATION) ORDER 2006 AND FREEDOM OF INFORMATION ACT 2000

The Chairman to move that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

Minutes:

RESOLVED that the Press and public be excluded during consideration of the items of business referred to below as it is likely in view of the nature of the business to be transacted or the nature of the proceedings that if members of the Press and public were present there would be disclosure to them of exempt information.

 

The following summaries

refer to matters

involving exempt information

34.

EXEMPT MINUTES OF THE PENSIONS INVESTMENT SUB-COMMITTEE MEETING HELD ON 24TH JULY 2019

Minutes:

The exempt minutes were agreed.

 

35.

UPDATES FROM THE CHAIRMAN AND/OR DIRECTOR OF FINANCE ON ANY EXEMPT MATTERS

Minutes:

Under Part 2 proceedings, Members considered matters related to the following areas: 

 

·  revised business permissions for the LCIV;

 

·  the LCIV Staff Pension Scheme and pension guarantee agreement;

 

·  the forthcoming Asset Allocation review for the L B Bromley Fund and a Multi-Asset Income Credit (MAIC) product to be considered further at the Sub-Committee’s meeting on 3rd December 2019.

 

RESOLVED that: following the Sub-Committee’s meeting on 3rd December 2019, a further special meeting of the Sub-Committee should be arranged for Tuesday 17th December 2019 to reflect any follow up matters from the draft outcome of the asset allocation review reported to the 3rd December meeting. (Democratic Services Note: following the meeting the Director of Finance referred to 17th December being a provisional date with the final date to be confirmed.)

 

Appendix A pdf icon PDF 69 KB

 

Original Text: